Crisis at Southwest Airlines Tells Us All We Need to Know About Corporate Corruption in the US

They want you to think it's the weather. It's actually about the greed.

The crisis over the last few days at Southwest Airlines – thousands of desperate travelers stranded all over the United States during the holiday season with no recourse – is not just a function of management incompetence. It reflects corporate corruption of the highest order not just at Southwest but also in our larger society. In my view, Southwest needs to be put into receivership with a new CEO just like President Obama did with General Motors in 2009 during the auto industry crisis.

This view is being largely ignored by the media.

The seeds of the current meltdown were planted years ago. For starters, Southwest snaked off with $3.2 billion in taxpayer bailout funds during COVID. Instead of using the funds to upgrade the company's tech infrastructure, CEO Bob Jordan continued to enrich himself and his top managers with exorbitant salaries ($112 million in the last five years paid to a small group). Jordan was paid $9 million last year. Under pressure from Wall Street, the company started to pay out a major dividend rather than getting its own house in order.

I urge you to read more about this debacle from David Sirota’s article for Lever News. Sirota explains who more than 30 state attorney generals have been warning the US Department of Transportation and Secretary Buttigieg about this predictable disaster for months. The cabinet secretary with presidential ambitions had done virtually nothing in response and is still largely passive.

As with Chevron in the Ecuador pollution case, what's happening with Southwest is yet another example of how easily corporations can "capture" the US government. Under industry pressure, Congress in 1978 immunized the US airline industry from consumer lawsuits at the state level; this takes away a major incentive to actually respect passengers. Refunds for cancelled flights often take months or years – effectively making passengers an interest-free "bank" for the executives who are screwing them. More than mere incompetence, we are witness to a despicable level of greed. To give you a sense of how weak the regulatory oversight is from the federal government, airlines made $196 billion in revenue in 2019 but paid only $2.1 million in fines.

This is some of what should happen to Southwest: put the airline into receivership with a new leader. Repeal the federal law barring states from suing under their own consumer protection laws. Fine the hell out of Southwest and use the funds to upgrade the failed tech systems and compensate passengers not just for lost flights but for the time and emotional distress caused by sitting in airports for days. Long-term, the US Department of Justice needs to break up the four major carriers so there is real competition that results in respect for passengers.

Let’s start thinking about what would happen in this situation in a normal democracy where government functions on behalf of the people, rather than in a society where corporations essentially bend government to their will.

They want you to think it’s about the weather. It’s actually about the greed. Personal greed a system structure that rewards it.